Back to Basics

Reflections of a Former Minister for Industrial Relations

The Hon Ian Viner Q.C.

The title for this keynote address is one which can capture a variety of moods---as contemplative as reflections in an afternoon light, as assertive as a self-portrait seen through the mirror of politics, as contemporary as the urgency of today's industrial relations issues or as distinct as the horizon of the perfect industrial relations system.

Mr President---thank you for the invitation to deliver the keynote address for the 'Back To Basics' Conference of the H R Nicholls Society. I regard it as a privilege to be here, so early in the life of the Society, for I firmly believe the affairs of the Society will command increasing attention and increasing acceptance by Australian Society as the years pass by.

Your purpose is honorable, though you will be assailed with accusations of the most vile of motives.

Your arguments are powerful, so powerful forces will be arraigned against you each time you raise your voice or set pen to paper or face the people through the television screens of the nation.

Your ideas are pervasive, though politicians will be afraid to act on them for fear of disturbing the political scene and practitioners of the industrial relations kind will put in your path every obstacle they can find for fear that their entrenched bureaucracies will be overthrown.

Mr President, members of the Society have already shown they are undaunted in pursuing their cause, as undaunted as H R Nicholls himself.

Industrial relations have always been at the heart of politics, of political power and influence, of great social causes, of the underlying nature of a country's political economy and the ultimate well-being of its workforce. That is why the perspective of change in industrial relations is an historical perspective of political and social change. In law and politics, climactic events in England 150 years ago revolving around workers acting in combination are still recalled in debate and decision-making; we are also reminded that the votes of two men 90 years ago changed the course of Australian constitutional law and the politics of the new nation through inclusion of the Commonwealth's industrial power in placitum 35 of section 51 of the Constitution.

Not so long ago in English legal and social history---only a couple of hundred years---profound change occurred through what has been referred to as the movement (in law) from status to contract in the relations of master and servant.

Paul Johnson has observed that an aspect of the same profound change has recently been taking place in Britain under Margaret Thatcher. The monopoly power of modern unions over the working lives of British men and women has been broken down by laws sweeping away status as a union member as the predeterminant of the right to work and continue in employment. Individuals can now act in their own interests, in business or employment, without being trammelled by consideration of status. Surely an egalitarian development!

After nearly 100 years, union immunity from the common law is being cast aside in Britain. The long legal march by Lord Denning has been joined by a committed political leader, to assert and uphold the common law rights of the individual.

Against a background of 83 years of an arbitration system based on status, union monopoly and immunity from the law, where does Australia stand?

One of those two men largely responsible for our Constitution including the Commonwealth's industrial power was Henry Bournes Higgins, the father of comparative wage justice and author of the Harvester Judgment, who saw in the system of compulsory arbitration in which strikes and lockouts were outlawed a new province of law and order. He was a man revered or reviled according to one's perspective on industrial or economic reality. By any standard the new province has failed. As I commented as Minister, we are now experiencing the rule of no-law. Order is turned on or off at the whim of the unions.

Unions were at first suspicious of this new institution---the Arbitration Court---but then quickly learned that it gave them monopoly rights to organise labour and an increasing supremacy of bargaining power over employers.

The 'conveniently belong' principle of the Act of 1904 was extended and applied to preserve the exclusive coverage of a union once registered. Room for creation of new unions to reflect the changing structure of industry was virtually closed off. Room for the un-unionised enterprise was precluded. Preference to unionists, originally provided in an altruistic way, gradually assumed the hallmarks of compulsory unionism notwithstanding being found unconstitutional by the High Court. The soft option of conscientious objection was later taken as an alternative to individual rights. Voluntary unionism was anathema to the union movement's philosophy of collectivism.

The early respect for arbitration and the responsibilities which registration as an organisation under the Act carried gave way over time to contempt for the sanctions and penalties of the Act. The culmination in the Clarrie O'Shea case was to make such sanctions and penalties a dead letter of the law. No one was more active in this purpose than the present Prime Minister when President of the ACTU.

It is interesting to recall the basics of the original compulsory arbitration system---a system with high ideals of which the President was required by the Act to be a Justice of the High Court. The Court was given power to prevent, settle, mediate and determine disputes, prescribe a minimum rate of wages or remuneration, apply penalties and issue process, execute against property and disqualify persons from membership or office for breaking the law.

Preference was to be denied to any union whose rules or decisions permitted the use of its funds for political purposes or which required its members to do anything of a political character!

Voluntary agreements could be made to settle disputes, needing only simple registration with the Court to be binding and enforceable by fixed monetary penalty.

No requirement then to pass a public interest test!

No basic wage, total wage, national wage, indexation or second tier!

A system born in a different age of ideas and national industrial structure; a creature of the Constitution but not created by the Constitution; a system created by Parliament which could be disbanded by Parliament tomorrow and something different created in its place, as I pointed out in a speech entitled 'The Americanisation of Australian Labour Relations' in November 1981.

Almost without exception, every fundamental precept on which the new province of law and order was erected at the turn of the century has been whittled away--- some might say brutalised and demolished---to the point that the Australian system of conciliation and arbitration which so many today declare to be unique and inviolate is incapable of recognition as the system which Henry Bournes Higgins himself voted to include in the Constitution.

The restraints on the liberties of Australians were severe enough under the original system. They have been compounded by the increasing concentration of power in the Commission and unions over the 80 years of the system's life, as David Kemp's compelling paper 'Trade Unions and Liberty' shows.

Thankfully the availability and use of section 45D of the Trade Practices Act and renewed awareness that common law remedies can be used against unions in Australia have started to redress the balance and restore some of those liberties. When I wrote into the Coalition Industrial Relations Policy in 1975 that engaging in secondary boycott activity was an unfair labour practice, I don't think too many people understood the potential impact it could have on union power. Those who had read Lord Denning's judgments would have understood.

When I opened an address to the 1973 Western Australian Law Summer School by saying 'the availability of civil law remedies to those hurt by industrial conflict has been one of the forgotten areas of Australian law' and forecast that 'with the weakening, if not breakdown of these statutory systems [of industrial law] in recent years, we could well witness employers and individuals hurt by industrial pressure tactics increasingly turn to the civil courts', few were prepared to act on that point of view. Fifteen years later Mudginberri and Dollar Sweets are by-words for the resurgence of the common law and Peter Costello's paper on 'Legal Remedies against Trade Union Conduct in Australia', delivered to your 1986 Inaugural Seminar, will be more widely read than mine.

Where, in the beginning, the Arbitration Court's role was the somewhat mechanistic though equitable one of preventing and settling interstate disputes by award or receiving voluntary agreements, today the Commission's influence over the economy matches even that of the Government itself. Through the importance of national wage cases and the techniques developed by Federal unions to endlessly rope in employer after employer, the Commonwealth Conciliation and Arbitration Commission has attained pre-eminent power and influence over industrial relations in Australia. Probably no other institution in any other country (certainly no institution outside Parliament in any Western Democracy) has achieved or has been established to exercise such profound influence over the relations of employers and employees and hence over the economic life of a nation.

As observed by the Senate Select Committee on Industrial Relations Legislation (October 1982): 'Its [the Commission's] wage decisions are as significant for the nation as the many economic and monetary decisions emanating from the federal government'.

It might properly be observed that under the Accords, since 1983, the Commission's decisions have acquired an even greater significance because, under the unity of approach of the Hawke Labor Government and the ACTU, wage, superannuation and other outcomes for the Australian workforce are concentrated even more in the hands of the Commission.

The Accord, at its birth in 1983, was a statement of principles of political economy by the union movement and its political wing, the Australian Labor Party, designed to serve their purposes and their social philosophy. These parties then sought to put those principles into effect through the Commission and their control of government.

I was appalled at the time at the obeisant acquiescence of many leading employers and their industrial relations representatives to the Accord. I applauded the seemingly lone voice of Hugh Morgan against it at the Economic Summit.

The point has been reached now where the ACTU says with apparent impunity and acquiescence by the Government that unless the Commission does its bidding the ACTU will walk out of the system.

Mr Justice Madden may yet turn out to be the ACTU's Sir John Kerr.

At the same time as the Accord has gone through its various 'Marks', the philosophy of corporatism, (in the name of ILO-sponsored 'tripartism') has been fostered by the Government, the ACTU and the Confederation of Australian Industry; and acquiesced in by the Commission. The ACTU and the Confederation seek, and are accorded, virtually sole representative rights as the peak representative bodies of the workforce and employers.

The move to corporatism is, in my view, plainly wrong. Institutionalising the peak bodies as the supreme representative parties before the Commission is the antithesis of the very system to which those bodies owe their birth---the antithesis of principles of voluntary association, of the rights of individuals as employees and employers, and of freedom of contract.

Australian industry is today more diversely based than it was in 1904, particularly with the growth of service industries, the impact of technology and the lessened role of manufacturing. There is every reason for other representative bodies of employers like the National Farmers' Federation, the Business Council of Australia, the Australian Chamber of Commerce, and the Small Business Association and other national or sectional employer groups to be given equal standing before the Commission---and no less in national wage cases than on other issues. It was a stance encouraged by me as Minister, no doubt to the chagrin of the Confederation, which has happily progressed over the last five years.

But the corporatist mood is reflective of the increasing effort by the ACTU to maintain centralised wage fixing as a means of maintaining its supremacy in policy and bargaining over the employers.

Ironically, the employers' victory in achieving a total wage in the 1960s has led inexorably to the supremacy of the ACTU before the Commission in national wage cases and the dominance of the centralised wage-fixing concepts.

I cannot see the Confederation winning the productivity argument in national wage cases in the foreseeable future.

Employers and, paradoxically, unions (as distinct from the Confederation and the ACTU) would be better off under a decentralised approach. Some might say I am simply riding my hobby-horse of Ministerial times following the breakdown of indexation in 1981; yet a coherent system of wage fixing by award or voluntary binding agreement can be built upon a decentralised approach without destroying or abandoning the Commission. I was not alone in my views then. The Treasury Department of the day supported them.

The employers lost a great opportunity to bring about change to their advantage and win the productivity argument by not following through the 1982 national wage case decision rejecting the ACTU's claim in which the Commission left the door open for adoption of a decentralised approach. Such an approach would have fitted so much more efficiently into the deregulated economic environment which was then beginning and has since swept the world and Australia.

It would have been a significant step---a catalyst for rapid structural change towards producing the flexible labour market acknowledged by most commentators today as being required to make Australian industry really competitive with the world. The arguments of the Hancock Committee of Review against a decentralised system are shallow and unconvincing; in fact, they fly in the face of many of the current pressures and practices spreading across the labour market in the direction of industry---and plant-level bargaining. I found it ironic to hear an industry leader, publicly antagonistic to changing the arbitration system, recently say privately that he would prefer to have an industry union and plant-level bargaining along American lines!

Even more ironic was to hear a Vice President of the ACTU, Bill Mansfield, say that a high priority has to be given to change of union structures in today's economic conditions; that the multiplicity of craft-based unions has produced 'horrific results' over the last 80 years and that there is a need for 'rationalisation' of union structures in favour of industry-based unions. What a sight to see the ACTU attacking its own sacred cows! My mind wandered for a moment back in time, like Dr Who, to 1982 and the vehement denunciation of my proposals for industry-based unions. Time changes all things. But this observation provides an insight into the thinking which has produced Australia Reconstructed by the ACTU and its proposals for 20 industry-based mega unions.

If I am not mistaken, the ACTU is way ahead of the employers in planning the restructuring of the labour market as it wants it on centralised wage-fixing lines to match the Hawke Government's planned restructuring of industry as a priority of its current term in office.

Even a Robe River might not be able to withstand the onslaught of 20 mega unions, with a monopoly of union representation under the Conciliation and Arbitration Act, dictating wages and conditions and work practices on the basis of a centralised wage-fixing system.

Recently I heard a leader of an employer organisation accept the need for industry unions and acknowledge that enterprise unions were (at least today rather than yesterday) a logical development in industrial relations but that their achievement was not 'realistic'. Aha, I thought, employers have moved one short step onto the industrial landscape---a giant step for Australia from the days of 1982. Ian Viner is half redeemed!

Why is it not realistic for management and workforce in an enterprise or plant to bargain their own labour contract? Many have bargained their own second-tier work practices agreement? Is industrial lateral thinking amongst employers so narrow and cave-like that it cannot comprehend the benefits of achieving an identity of common interests?

Have any of these employers or their organisations ever tried to open up dialogue with their own workforce?

Has the Confederation ever thought that the battle it hasn't won before the Commission at national wage level can be won across the face of Australian industry in a multitude of work places by management and their employees coming together to reach their own agreement instead of waiting on the rhetoric, grandstanding and erudition of parties before the Commission. Can such ideas be so wrong when they are practised by the two most powerful economies in the world and when the historical birthplace of Australia's unionism has moved from status to contract, the rule of law and the freedom of the individual.

It is often argued that changing the law will not change the attitudes of industrial relations participants or practitioners. That is simply incorrect as the whole of history will testify, not the least those laws of England which entrenched our basic liberties.

Then again it is said (by employers) that other heads of Commonwealth constitutional power should not be used in industrial matters to bring about change. I do not agree. The Hancock Committee describes the corporations power as 'exotic'. That can only be a view born of ignorance or prejudice. The trade and commerce powers, the corporations power and other heads of power in section 51 are, I believe, available by themselves or complementary to the industrial relations power to build structures which will create a flexible labour market, introduce greater efficiency into the economy and provide the Commonwealth with a better basis to manage the key elements of the economy.

In the end, the Commission only has the powers and duties granted to it by the Commonwealth Parliament and, as I foreshadowed as early as the first Constitutional Convention in 1973, 'the trade and commerce power and the corporations power have barely been tapped and their extent is limited only by the limitations that we place upon our concept of them'.

My somewhat heretical speech as Minister on 'The Americanisation of Australian Labour Relations' expresses my views on the Constitution. I would add an update.

It would indeed be the supreme irony to resort to the external affairs power of the Commonwealth, involving the Covenants and Declarations of the ILO and the United Nations to legislate all the desirable changes to our industrial relations system!

I believe there is an urgency about the task facing employers and individual members of the workforce in coping with the changes which theACTU is intent on introducing to restructure industry and restructure the shape of Australian unions. There is also an urgency facing politicians opposed to the Labor Government to address these issues and commit themselves to action in government.

Mr President, your Society has a commanding role in changing attitudes and awakening people to the magnitude of changes which could come by default.

Your values are sound. Your arguments are already producing changed attitudes, practices and policies.

There has been a marked movement of opinion since the days I was labelled a confrontationist because I objected to strike-happy public service unions, argued for a decentralised wage system and binding labour contracts, legislated for voluntary unionism, damages for breach of industrial law and industry-based unions, and even dared to foreshadow legislating for employees to exercise their right of voluntary association to form their own enterprise union.

It is indeed a strange world we live in but one too precious for us to stand idly by and let basic values be eroded and, in some cases, destroyed.

Why HR Nicholls?

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